The latest growth projection was released along with new estimates for global growth or the world output which the International Monetary Fund is now projecting to grow more slowly at 3.7 percent this year and in 2019 because of trade tensions, particularly between the USA and China.

The fund kept its forecast for growth in the Chinese economy unchanged at 6.6 percent this year.

U.S. -CHINA TALKS: U.S. Secretary of State Mike Pompeo said that Washington had a “fundamental disagreement” and “great concerns” about Chinese actions, before a meeting with Chinese Foreign Minister Wang Yi and another senior official in Beijing on Monday.

The ongoing trade war between the USA and China could start having material effects on the economies of both countries within the coming years, according to new projections from the International Monetary Fund (IMF).

According to a media report, State Bank of Pakistan had viewed that the exchange rate of Rs137 to a dollar by the end of current fiscal year in June 2019 would be sufficient to address the challenges.

Germany, the economic powerhouse of Europe, could be particularly hard hit by a drop in manufacturing orders and trade volumes.

United Kingdom growth has been drastically cut in the aftermath of the Brexit vote; uncertainties surrounding the country’s divorce from the European Union have stymied investment and seen part of its key financial sector relocate to the continent.

“We have not been formally approached yet”, said Maurice Obstfeld, the IMF’s top economist, during the fund’s annual meeting in Bali Tuesday.

The UK economy is expected to grow by 1.4% this year – down from April’s prediction of 1.6% – while predicted growth for 2019 remains at 1.5%, a slowdown from 1.7% in 2017.

According to the WEO report, growth is on the mend for sub-Saharan Africa, with the region’s average growth projected to rise to 3.1 per cent in 2018 (from 2.7 per cent in 2017) and 3.8 per cent in 2019. “Any sharp reversal for emerging markets would pose a significant threat to advanced economies”, he added.

The Washington-based lender said a health check on the wealth of 31 nations found nearly £1tn had been wiped off the wealth of the UK’s public sector – equivalent to 50% of GDP – putting it in the second weakest position, with only Portugal in a worse state.

But additional tariffs and countermeasures “could lead to a broader tightening of financial conditions, with negative implications for the global economy and financial stability”, the fund warned.

It found that global GDP output under this scenario would fall by more than 0.8 percent in 2020 and remain roughly 0.4 percent lower in the long-term compared to levels without the effects of a trade war.

Using a hypothetical “stress test” scenario developed by the US Federal Reserve for banking regulation, the International Monetary Fund found a severe recession would cut the value of America’s publicly held assets by an amount equal to 26 percent of GDP by 2020. It also assumes that Trump imposes a 25 percent tariff on imported cars and auto parts.